Question

Suppose that each of the forest products experience a 10% increase in the price of the good to offset carbon emissions. What will the impact of this be in terms of the % change in the quantity demanded (use the short-run estimates to answer this question)?

Answer 1

As a result of 10% increase in the process of all the Forest product the quantity demanded will fall but will be generally less thana 10 percent freak means the elasticity of demand for forest products will be less elastic or inelastic in short run.

In the story run the demand is inelastic and the forest products basically timber and other products directly or indirectly associated with forests like fruits, mushroom,palm wine , honey palm oil etc are the goods of necessity or may be comfort in some cases, so they will have an inelastic price elasticity.

In long run the scenario may change a bit and demand may be little more elastic.

In short run context the percentage change in quantity demanded will be less than the percentage change in price.

Here price increase by 10 percent so the quantity demanded will fall by lesser than 10 percent.